April 18, 2014

Dear Sir,

In the fall of 2013, the OBA Government quietly enacted the Proceeds of Crime and Related Measures Amendment Act 2013.

This omnibus legislation, which became effective on 8 November 2013, not only greatly increases the penalties for political corruption but also greatly strengthens the ability of the police and Director of Public Prosecutions to gather evidence and recover tainted property such as bribes, kickbacks and any assets purchased with that tainted money.

What does that mean for Bermuda?

First of all, it means that Bermuda has taken an important step in deterring political corruption both now and in the future.

Second, it means that all of those tainted Government contracts over the last ten years - particularly those involving large construction projects such as the Berkeley Institute, Heritage Wharf, Port Royal Golf Course, TCD, the Emissions Control Centres, and the Lois Browne Evans Courthouse Building - can now be properly investigated with much less chance of interference from implicated persons.

Third, if there were any illegal kickbacks paid to Government Officials, that money (as well as any houses, boats, cars, jewellery, etc, that may have been purchased with such tainted money) can more easily be recovered by the police and Director of Public Prosecutions.

Here are some of the key legislative changes.

(i) Official Corruption

Under section 111 of the Criminal Code (Official Corruption), the penalty for a Member of Parliament, Senator or Government employee accepting a bribe or kickback has been increased from a maximum of three years in prison to 15 years in prison and an unlimited fine.

Additionally, under section 33B of the Public Treasury (Administration and Payments) Act, the penalty for a Member of Parliament or Senator attempting to influence the awarding of a Government contract has been increased from a maximum of one year in prison and a fine of $10,000 to a maximum of 15 years in prison and an unlimited fine.

While these increases in sanctions will not apply to any past crimes (it’s unconstitutional to make penal sanctions retroactive) it does make corruption under the present OBA Government and all future governments a much riskier proposition for the potential perpetrator.

Does that mean any former Government Official who received illegal kickbacks from a connected contractor will get away with his crimes? No.

First of all, such corrupt official and connected contractor could still receive up to three years in prison for each count of Official Corruption under Section 111 of the Criminal Code as it existed prior to the amendment last fall.

Second, such corrupt official and connected contractor could each receive sentences of up to 20 years in prison under the Proceeds of Crime Act if they used any of the usual money-laundering ruses to hide or mask the illegal kickbacks, such as

(i) the contractor wiring the kickback money to the offshore account of the corrupt official who awarded him the lucrative contract or

(ii) concealing or disguising the property which directly or indirectly represents the proceeds of criminal conduct (such as arranging for the payment of phoney “Advisory Fees” to the wife or other family member of the Corrupt Official, or receiving shares in the connected contractor’s company at a price below fair market value).

There is one part of the new legislation that will also apply to past corruption. Section70IA of the Criminal Code gives the Director of Public Prosecutions the right to apply to the court for a “Deprivation Order” to recover all money and tainted assets in respect of an offence of which a person has been convicted.

In other words, not only will any former, present or future corrupt Government Official face the very real possibility of going to prison for a significant period of time, but the people of Bermuda will have the right to recover any money and tainted assets illegally obtained through corruption.

(ii) Interference with police investigations into corruption

In a small community like Bermuda, where everyone knows everyone, criminals from all walks of life have significant ability to interfere with the course of justice by convincing friends or relatives to alter or suppress evidence or change their testimony.

When those criminals are elected officials holding the highest offices of Government, the potential for interference with a police investigation grows exponentially.

The new legislation enacted by the OBA Government addresses this systemic weakness by creating new offences as well as significantly increasing prison sentences and fines.

For example, a person faces up to 10 years in prison and an unlimited fine if he

(i) destroys, conceals or withholds evidence,

(ii) fabricates evidence or makes use of fabricated evidence,

(iii) attempts to induce a person to give false testimony, or

(iv) participates in a conspiracy to obstruct, prevent, pervert or defeat the course of justice.

Further, since money laundering is usually a key ingredient of Government corruption - the money is removed from the country or masked to prevent detection - the money laundering provisions under the Proceeds of Crime Act have been strengthened to deter persons from undermining a police investigation that involves “following the money.”

For instance, an employee of a regulated financial institution (such as a bank or trust company) faces up to ten years in prison and an unlimited fine if he tells anyone about a police investigation into financial transactions (such as when the police “follow the money” by investigating the bank records of connected contractors and the Government Official who awarded them the tainted contracts).

In other words, the police can now more effectively “follow the money” from past crimes to gather incriminating evidence, and anyone who interferes with that investigation faces the prospect of spending many years in prison and paying an unlimited fine.

(iii) Summary

The new anti-corruption measures enacted by the OBA Government have significantly increased the penalties for political corruption and for interference with police investigations of that corruption.

Such changes should not only help clean up past political corruption but also deter political corruption both now and in the future.

KEVIN COMEAU

Rancho Santa Fe,

California